What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-06 · 392 added, 154 removed, 438 unchanged (55% of the section changed)

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3) Logistics - We operate an extensive multi-modal logistics network spanning the Pacific, the Northwest, and the Rocky Mountain regions to transport and store crude oil and refined products for our refineries and transport refined products to our retail sites or third-party purchasers.

As of March 31, 2022, we owned a 46.0% equity investment in Laramie Energy.

As of June 30, 2022, we owned a 46.0% equity investment in Laramie Energy.

Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado.

Given the improved outlook for natural gas, we are considering strategic alternatives with respect to our investment in Laramie Energy given the improved outlook for natural gas, including, among other things, a change in the size of our investment.

Given the improved outlook for natural gas, we are considering strategic alternatives with respect to our investment in Laramie Energy, including, among other things, a change in the size of our investment.

We have four reportable segments:

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Recent Events Affecting Comparability of Periods

During the first quarter of 2022, the global market for energy commodities experienced significant volatility.

In January and February, the price of crude oil maintained the steady increase experienced in the last quarter of 2021 as the global economy continued to recover from lows related to the COVID-19 pandemic and the Organization of the Petroleum Exporting Countries, or OPEC, and its oil-producing allies implemented modest production increases while global demand surged.

The rise in demand was driven by a recovery of U.S.

domestic travel to pre-pandemic levels as COVID-19 cases declined and an improved outlook on international tourism from the Asian market for the remainder of 2022 as international travel restrictions in Japan eased in March.

During the first half of 2022, the global market for energy commodities experienced rising prices and significant volatility.

The price of crude oil continues to rise as the global economy recovers from lows related to the COVID-19 pandemic.

The Organization of the Petroleum Exporting Companies (“OPEC”) and its oil-producing allies are forecasting production increases and increasing global demand throughout 2022.

This rise in demand is driven by a recovery of global travel to pre-pandemic levels as well as a rise in gasoline demand as people return to in-office work and traveling.

In March, the U.S.

Centers for Disease Control and Prevention (“CDC”) lifted its Travel Health Notice for cruise ships in response to the decline in COVID-19 cases, and in April, the requirement for passengers to wear masks on airplanes mandated by the CDC was struck down in a U.S.

District Court.

Airline companies, which represent a significant portion of our Hawaii market through jet fuel sales, have forecasted significant increases in air travel volumes for the remainder of 2022, further signifying an expected return to pre-pandemic levels of demand in the Pacific region.

Centers for Disease Control and Prevention (“CDC”) lifted its Travel Health Notice for cruise ships in response to the decline in COVID-19 cases, and, as of April, the U.S.

Transportation Security Administration (“TSA”) no longer requires masking on U.S.

domestic flights.

Airline companies, which represent a significant portion of our Hawaii market through jet fuel sales, have forecasted significant increases in air travel volumes for the remainder of 2022 and Hawaii visitor counts for the first half of 2022 are in excess of 90% of pre-pandemic levels.

Over the past 12 months, energy prices increased 41.6% and U.S.

gasoline prices increased 11.2% in June alone.

Rising gasoline prices, and rising energy prices overall, are indicators of inflation and the U.S.

Federal Reserve (the “Fed”) has begun taking steps to try to curb inflation.

In summer 2022, the Fed increased its benchmark interest rate by 75 basis points twice, to 1.75% in June and to 2.5% in July, bringing the benchmark rate to its highest level since December 2018.

Following the July increase, the Fed indicated that it was open to further increases in September.

These actions by the Fed are intended to cool rising U.S.

inflation rates, which have increased 9.1% year over year as of June 2022, by slowing economic growth and nonessential consumer spending (including travel).

If consumer spending decreases as a result of these actions, it is expected that demand and prices for our products will decrease in kind.

In response to the Russian invasion of Ukraine in February, the international community imposed economic sanctions and other limitations on Russian exports, which further decreased the global supply of crude oil and drove up the price of crude oil.

By early March, crude oil reached its highest price since 2008.

On March 3, 2022, we suspended purchases of Russian crude oil for our Hawaii refinery in response to the Russia-Ukraine conflict.

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Please read Item 1A.

— Risk Factors for more information on the Russia-Ukraine conflict and its potential impacts on our business.

Additionally, the financial results contained in this Quarterly Report on Form 10-Q reflect the continuing COVID-19 pandemic-related demand suppression experienced in the regions in which we operate.

Though vaccine availability and vaccination rates are increasing, the pandemic is ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report.

— Risk Factors for more information on the Russia-Ukraine conflict and its potential impacts on our

Additionally, the financial results contained in this Quarterly Report on Form 10-Q reflect rebounding demand driven by decreasing COVID-19 pandemic-related demand suppression experienced in the regions in which we operate.

Although case counts are increasing relative to early in the pandemic, widespread vaccine availability has lessened the severity of COVID-19 cases leading to increased travel and public contact.

The pandemic is ongoing and the impacts of the virus on people and businesses continue to evolve as of the date of this report.

The full magnitude of the impact of these and other events on our financial condition, future results of operations, and future cash flows and liquidity is uncertain and has been and may continue to be material.

Results of Operations

Three months ended March 31, 2022 compared to the three months ended March 31, 2021

Our financial results declined from a net loss of $62.2 million for the three months ended March 31, 2021 to a net loss of $137.1 million for the three months ended March 31, 2022.

The increase in our net loss was primarily driven by a gain of $63.9 million related to the Sale-Leaseback Transactions and a $2.0 million gain on curtailment of pension obligation in the three months ended March 31, 2021 with no such gains in the 2022 comparable period .

Other factors impacting our results period over period include higher utilities and repair and maintenance costs and higher employee expenses.

Adjusted EBITDA and Adjusted Net Loss.

For the three months ended March 31, 2022, Adjusted EBITDA was $8.3 million compared to a loss of $34.4 million for the three months ended March 31, 2021.

The improvement was primarily related to favorable crack spreads across all our refineries and lower RINs costs, partially offset by unfavorable feedstock and purchased product costs and higher costs related to our inventory financing agreements.

Other factors impacting our results period over period include realized derivative unfavorability and increased fuel burn costs for the three months ended March 31, 2022.

For the three months ended March 31, 2022, Adjusted Net Loss was $31.4 million compared to $75.4 million for the three months ended March 31, 2021.

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

Net Income (Loss).

Our financial results for the second quarter of 2022 improved from a net loss of $109.0 million for the three months ended June 30, 2021 to net income of $149.1 million for the three months ended June 30, 2022.

The increase was primarily driven by higher product crack spreads and a favorable change in FIFO benefit at our Hawaii refinery, partially offset by higher purchased product differentials and derivative costs and higher RINs expenses.

Adjusted EBITDA and Adjusted Net Income (Loss).

For the three months ended June 30, 2022, Adjusted EBITDA was $242.1 million compared to $26.7 million for the three months ended June 30, 2021.

The increase was primarily related to improved crack spreads across all of our refineries, partially offset by unfavorable purchased product differentials and realized derivatives at our Hawaii refinery and higher costs related to our inventory financing agreements.

For the three months ended June 30, 2022, Adjusted Net Income was $197.2 million compared to a loss of $14.7 million for the three months ended June 30, 2021.

The improvement was primarily related to the factors described above for the increase in Adjusted EBITDA.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021

Net Income (Loss).

Our financial results improved from a net loss of $171.2 million for the six months ended June 30, 2021 to net income of $12.1 million for the six months ended June 30, 2022.

The increase in profitability was primarily driven by higher product crack spreads, partially offset by unfavorable purchased product differentials and derivatives costs, higher costs associated with our inventory financing agreements, and a gain of $63.9 million related to the 2021 Hawaii sale-leaseback transactions in the six months ended June 30, 2021 with no such gain in the 2022 comparable period.

Adjusted EBITDA and Adjusted Net Income (Loss).

For the six months ended June 30, 2022, Adjusted EBITDA was $254.5 million compared to $40.4 million for the six months ended June 30, 2021.

The improvement was primarily related to favorable crack spreads across all of our refineries, partially offset by unfavorable purchased product differentials and realized derivatives at our Hawaii refinery and higher costs related to our inventory financing agreements.

Other factors impacting our results period over period include increased fuel burn costs, a 4% decrease in refining sales volume primarily related to the Washington refinery turnaround in 2022, and higher operating expenses compared to the comparable period in 2021.

For the six months ended June 30, 2022, Adjusted Net Income was $169.9 million compared to a loss of $42.0 million for the six months ended June 30, 2021.

The improvement was primarily related to the same factors described above for the increase in Adjusted EBITDA.

The following tables summarize our consolidated results of operations for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 (in thousands).

The following tables summarize our consolidated results of operations for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 (in thousands).

The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Three Months Ended March 31,

Three Months Ended June 30,

2022 2021 $ Change % Change

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Operating expense (excluding depreciation) 82,342 68,821 13,521 20%

Depreciation, depletion, and amortization 23,780 22,880 900 4%

Gain on sale of assets, net — (64,912) 64,912 100%

Depreciation and amortization 25,583 23,548 2,035 9%

Loss on sale of assets, net 15 510 (495) (97)%

General and administrative expense (excluding depreciation) 15,438 12,201 3,237 27%

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Total operating expenses 1,932,303 1,302,026

Operating loss (121,096) (44,662)

Operating income (loss) 174,029 (84,501)

Other income (expense)

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Debt extinguishment and commitment costs (5,672) (6,628) 956 (14)%

Other income (expense), net 47 (36) 83 231%

Total other expense, net (23,779) (23,850)

Income (loss) before income taxes 150,250 (108,351)

Income tax expense (1,125) (607) (518) 85%

Net income (loss) $ 149,125 $ (108,958)

Six Months Ended June 30,

2022 2021 $ Change % Change

Revenues $ 3,456,625 $ 2,106,205 $ 1,350,420 64%

Cost of revenues (excluding depreciation) 3,159,174 2,086,161 1,073,013 51%

Operating expense (excluding depreciation) 163,746 143,009 20,737 15%

Depreciation and amortization 49,363 46,428 2,935 6%

Loss (gain) on sale of assets, net 15 (64,402) 64,417 (100)%

General and administrative expense (excluding depreciation) 31,331 24,086 7,245 30%

Acquisition and integration costs 63 86 (23) (27)%

Total operating expenses 3,403,692 2,235,368

Operating income (loss) 52,933 (129,163)

Other income (expense)

Interest expense and financing costs, net (34,548) (35,337) 789 (2)%

Debt extinguishment and commitment costs (5,672) (8,135) 2,463 (30)%

Gain on curtailment of pension obligation — 2,032 (2,032) (100)%

Other income, net 49 25 24 96%

Total other income (expense), net (16,392) (17,565)

Loss before income taxes (137,488) (62,227)

Income tax benefit (expense) 437 — 437 NM

Net loss $ (137,051) $ (62,227)

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(1) NM - Not meaningful

The following tables summarize our operating income (loss) by segment for the three months ended March 31, 2022 and 2021 (in thousands).

Total other expense, net (40,171) (41,415)

Income (loss) before income taxes 12,762 (170,578)

Income tax expense (688) (607) (81) (13)%

Net income (loss) $ 12,074 $ (171,185)

The following tables summarize our operating income (loss) by segment for the three and six months ended June 30, 2022 and 2021 (in thousands).

The following should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Three months ended March 31, 2022 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Three months ended June 30, 2022 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 2,044,455 $ 50,633 $ 147,211 $ (135,967) $ 2,106,332

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Operating expense (excluding depreciation) 59,101 3,797 19,444 — 82,342

Depreciation, depletion, and amortization 15,333 5,087 2,691 669 23,780

Depreciation and amortization 16,979 5,211 2,600 793 25,583

Loss (gain) on sale of assets, net — (12) — 27 15

General and administrative expense (excluding depreciation) — — — 15,438 15,438

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Operating income (loss) $ 168,798 $ 15,898 $ 5,525 $ (16,192) $ 174,029

Three months ended March 31, 2021 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Three months ended June 30, 2021 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,155,847 $ 48,706 $ 118,446 $ (105,474) $ 1,217,525

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Operating expense (excluding depreciation) 47,944 3,494 17,383 — 68,821

Depreciation, depletion, and amortization 14,064 5,254 2,660 902 22,880

Depreciation and amortization 14,561 5,377 2,874 736 23,548

Loss (gain) on sale of assets, net 1,664 (21) (1,133) — 510

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________________________________________________________

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $111.3 million and $82.6 million for the three months ended March 31, 2022 and 2021, respectively.

Below is a summary of key operating statistics for the refining segment for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $136.0 million and $105.5 million for the three months ended June 30, 2022 and 2021, respectively.

Six months ended June 30, 2022 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 3,343,678 $ 93,094 $ 267,120 $ (247,267) $ 3,456,625

Cost of revenues (excluding depreciation) 3,143,492 49,488 213,484 (247,290) 3,159,174

Operating expense (excluding depreciation) 117,401 7,570 38,775 — 163,746

Depreciation and amortization 32,312 10,298 5,291 1,462 49,363

Loss (gain) on sale of assets, net — (12) — 27 15

General and administrative expense (excluding depreciation) — — — 31,331 31,331

Acquisition and integration costs — — — 63 63

Operating income (loss) $ 50,473 $ 25,750 $ 9,570 $ (32,860) $ 52,933

Six months ended June 30, 2021 Refining Logistics Retail Corporate, Eliminations and Other (1) Total

Revenues $ 1,994,602 $ 90,015 $ 209,634 $ (188,046) $ 2,106,205

Cost of revenues (excluding depreciation) 2,074,274 47,396 152,543 (188,052) 2,086,161

Operating expense (excluding depreciation) 101,282 7,390 34,337 — 143,009

Depreciation and amortization 28,625 10,631 5,534 1,638 46,428

Loss (gain) from sale of assets, net (19,595) (21) (44,786) — (64,402)

General and administrative expense (excluding depreciation) — — — 24,086 24,086

Acquisition and integration costs — — — 86 86

Operating income (loss) $ (189,984) $ 24,619 $ 62,006 $ (25,804) $ (129,163)

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(1) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $247.3 million and $188.0 million for the six months ended June 30, 2022 and 2021, respectively.

Below is a summary of key operating statistics for the refining segment for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Total Refining Segment

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Production costs per bbl ($/throughput bbl) (2) 4.50 3.40 4.45 3.69

DD&A per bbl ($/throughput bbl) 0.66 0.68

D&A per bbl ($/throughput bbl) 0.66 0.65 0.66 0.66

Washington Refinery

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Production costs per bbl ($/throughput bbl) (2) 3.40 3.28 4.71 3.76

DD&A per bbl ($/throughput bbl) 3.29 1.77

Three Months Ended March 31,

D&A per bbl ($/throughput bbl) 2.03 1.49 2.45 1.62

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Wyoming Refinery

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Production costs per bbl ($/throughput bbl) (2) 6.97 5.71 7.46 6.78

DD&A per bbl ($/throughput bbl) 3.24 3.11

D&A per bbl ($/throughput bbl) 2.92 2.63 3.07 2.85

Market Indices (average $ per barrel)

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Adjusted Gross Margin for our other refineries is determined under the first-in, first-out (“FIFO”) inventory costing method.

The definition of Adjusted Gross Margin was modified beginning with the financial results reported for periods in fiscal year 2022.

We have recast Adjusted Gross Margin for prior periods when reported to conform to the modified presentation.

Please see discussion of Adjusted Gross Margin below.

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We believe the Wyoming 3-2-1 Index is the most representative market indicator for our operations in Wyoming.

The Wyoming 3-2-1

Index is computed by taking two parts gasoline and one part distillates (ULSD) as created from three barrels of West Texas Intermediate Crude Oil (“WTI”).

The Wyoming 3-2-1 Index is computed by taking two parts gasoline and one part distillates (ULSD) as created from three barrels of West Texas Intermediate Crude Oil (“WTI”).

Pricing is based 50% on applicable product pricing in Rapid City, South Dakota, and 50% on applicable product pricing in Denver, Colorado.

Below is a summary of key operating statistics for the retail segment for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

Below is a summary of key operating statistics for the retail segment for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Retail Segment

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These non-GAAP measures may not be comparable to similarly titled measures used by other companies since each company may define these terms differently.

We believe Adjusted Gross Margin (as defined below) provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreements and lower of cost and net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation, depletion, and amortization.

Management uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks.

We believe Adjusted Net Income (Loss) and Adjusted EBITDA (as defined below) are useful supplemental financial measures that allow investors to assess the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis, the ability of our assets to generate cash to pay interest on our indebtedness, and our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure.

Beginning with financial results reported for periods in fiscal year 2022, the inventory valuation adjustment was modified to include the first-in, first-out (“FIFO”) inventory gains (losses) associated with the our titled manufactured inventory in Hawaii.

This modification was made to better align Adjusted Net Income (Loss) and Adjusted EBITDA with the cash flow of the Hawaii refining business.

Prior to 2022, the impacts of FIFO inventory gains (losses) associated with Hawaii titled manufactured inventory were eliminated through the inventory valuation adjustment.

We have recast Adjusted Gross Margin, Adjusted Net Income, and Adjusted EBITDA for prior periods when reported to conform to the modified presentation.

Beginning with financial results reported for the second quarter of 2022, Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA also exclude the mark-to-market losses (gains) associated with our net RINs liability.

This modification was made to better reflect our operating performance and to improve comparability between periods.

We have recast Adjusted Gross Margin, Adjusted Net Income (Loss), and Adjusted EBITDA for prior periods when reported to conform to the modified presentation.

Adjusted Gross Margin

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• operating expense (excluding depreciation);

• depreciation, depletion, and amortization (“DD&A”);

• depreciation and amortization (“D&A”);

• impairment expense;

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• LIFO layer liquidation impacts associated with our Washington inventory;

• Renewable Identification Numbers (“RINs”) loss (gain) in excess of net obligation (which represents the income statement effect of reflecting our RINs liability on a net basis);

• Renewable Identification Numbers (“RINs”) mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis;

beginning with financial results reported for the second quarter of 2022, this also includes the mark-to-market losses (gains) associated with our net RINs liability);

• unrealized loss (gain) on derivatives.

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• LIFO layer liquidation impacts associated with our Washington inventory;

• RINs loss (gain) in excess of net obligation.

• RINs mark-to-market adjustments.

We define cost of revenues (excluding depreciation) as:

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The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands):

Three months ended March 31, 2022 Refining Logistics Retail

Three months ended June 30, 2022 Refining Logistics Retail

Operating income $ 168,798 $ 15,898 $ 5,525

Operating expense (excluding depreciation)

59,101 3,797 19,444

Depreciation and amortization 16,979 5,211 2,600

Loss (gain) on sale of assets, net — (12) —

Inventory valuation adjustment (7,557) — —

RINs mark-to-market adjustments 78,548 — —

Unrealized gain on derivatives (28,607) — —

Adjusted Gross Margin (1) $ 287,262 $ 24,894 $ 27,569

Three months ended June 30, 2021 Refining Logistics Retail

Operating income (loss) $ (99,119) $ 14,542 $ 12,651

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47,944 3,494 17,383

Depreciation, depletion, and amortization 15,333 5,087 2,691

Depreciation and amortization 14,561 5,377 2,874

Loss (gain) on sale of assets, net 1,664 (21) (1,133)

Inventory valuation adjustment 29,657 — —

RINs loss in excess of net obligation 7,256 — —

LIFO liquidation adjustment 2,263 — —

RINs mark-to-market adjustments 54,158 — —

Unrealized loss on derivatives 1,404 — —

Adjusted Gross Margin (2) $ 52,532 $ 23,392 $ 31,775

Three months ended March 31, 2021 Refining Logistics Retail

Six months ended June 30, 2022 Refining Logistics Retail

Operating income $ 50,473 $ 25,750 $ 9,570

Operating expense (excluding depreciation)

117,401 7,570 38,775

Depreciation and amortization 32,312 10,298 5,291

Gain on sale of assets, net — (12) —

Inventory valuation adjustment 73,096 — —

RINs mark-to-market adjustments 89,850 — —

Unrealized gain on derivatives (13,155) — —

Adjusted Gross Margin (1) $ 349,977 $ 43,606 $ 53,636

Six months ended June 30, 2021 Refining Logistics Retail

Operating income (loss) $ (189,984) $ 24,619 $ 62,006

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101,282 7,390 34,337

Depreciation, depletion, and amortization 14,064 5,254 2,660

Loss on sale of assets, net (21,259) — (43,653)

Depreciation and amortization 28,625 10,631 5,534

Loss (gain) on sale of assets, net (19,595) (21) (44,786)

Inventory valuation adjustment 52,743 — —

LIFO liquidation adjustment 4,151 — —

RINs loss in excess of net obligation 28,770 — —

RINs mark-to-market adjustments 131,060 — —

Unrealized gain on derivatives (2,608) — —

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____________________________________________________________________________

(1) For the three months ended March 31, 2022, there was no loss (gain) on sale of assets, impairment expense, or LIFO liquidation adjustment recorded in Operating income (loss).

(2) For the three months ended March 31, 2021, there was no impairment expense recorded in Operating income (loss).

(1) For the three and six months ended June 30, 2022, there was no impairment expense or LIFO liquidation adjustment recorded in Operating income (loss).

(2) For the three and six months ended June 30, 2021, there was no impairment expense recorded in Operating income (loss).

Adjusted Net Income (Loss) and Adjusted EBITDA

3 unchanged sentences

• the LIFO layer liquidation impacts associated with our Washington inventory;

• RINs loss (gain) in excess of net obligation;

• RINs mark-to-market adjustments (which represents the income statement effect of reflecting our RINs liability on a net basis;

beginning with financial results reported for the second quarter of 2022, this also includes the mark-to-market losses (gains) associated with our net RINs liability);

• unrealized (gain) loss on derivatives;

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• (gain) loss on sale of assets;

• impairment expense, impairment expense associated with our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference;

• impairment expense;

• impairment expense associated with our investment in Laramie Energy and our share of Laramie Energy’s asset impairment losses in excess of our basis difference;

• Par’s share of Laramie Energy’s unrealized loss (gain) on derivatives.

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• income tax expense (benefit).

The following table presents a reconciliation of Adjusted Net Loss and Adjusted EBITDA to the most directly comparable GAAP financial measure, Net loss, on a historical basis for the periods indicated (in thousands):

Three Months Ended March 31,

Net Loss $ (137,051) $ (62,227)

The following table presents a reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable GAAP financial measure, Net income (loss), on a historical basis for the periods indicated (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net Income (Loss) $ 149,125 $ (108,958) $ 12,074 $ (171,185)

Inventory valuation adjustment (7,557) 29,657 73,096 52,743

LIFO liquidation adjustment — 2,263 — 4,151

RINs loss in excess of net obligation 7,256 28,770

RINs mark-to-market adjustments 78,548 54,158 89,850 131,060

Unrealized loss (gain) on derivatives (28,607) 1,404 (13,155) (2,608)

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Loss (gain) on sale of assets, net 15 510 15 (64,402)

Adjusted Net Loss (1) (31,399) (75,446)

Depreciation, depletion, and amortization 23,780 22,880

Adjusted Net Income (Loss) (1) 197,231 (14,690) 169,878 (42,004)

Depreciation and amortization 25,583 23,548 49,363 46,428

Interest expense and financing costs, net 18,154 17,186 34,548 35,337

Income tax expense (benefit) (437) —

Income tax expense 1,125 607 688 607

Adjusted EBITDA (1) $ 242,093 $ 26,651 $ 254,477 $ 40,368

________________________________________

(1) For the three months ended March 31, 2022 and 2021, there was no change in value of contingent consideration, change in value of common stock warrants, change in valuation allowance or other deferred tax items, impairment expense, or equity losses (earnings) from Laramie Energy, LLC, including impairments associated with our investment in Laramie Energy, our share of Laramie Energy’s asset impairment losses in excess of our basis difference, and our share of Laramie Energy’s unrealized loss (gain) on derivatives.

(1) For the three and six months ended June 30, 2022 and 2021, there was no change in value of contingent consideration, change in value of common stock warrants, change in valuation allowance or other deferred tax items, impairment expense, or equity losses (earnings) from Laramie Energy, LLC, including impairments associated with our investment in Laramie Energy, our share of Laramie Energy’s asset impairment losses in excess of our basis difference, and our share of Laramie Energy’s unrealized loss (gain) on derivatives.

Factors Impacting Segment Results

Three months ended March 31, 2022 compared to the three months ended March 31, 2021

Operating loss for our refining segment was $118.3 million for the three months ended March 31, 2022, an increased loss of $27.4 million compared to an operating loss of $90.9 million for the three months ended March 31, 2021.

The increased loss was primarily driven by higher costs associated with our inventory financing agreements, higher feedstock costs across our refineries, and unfavorable purchased product and derivative costs at our Hawaii refinery, partially offset by favorable crack spreads across our refineries and a $67.9 million decrease in RINs expenses.

Other factors impacting our results period over period include a gain on sale of assets of $21.3 million in the three months ended March 31, 2021 primarily related to the Sale-Leaseback Transactions we closed in the first quarter of 2021 with no such gain in 2022 and increased fuel burn costs for the three months ended March 31, 2022.

Operating income for our logistics segment was $9.9 million for the three months ended March 31, 2022, which was relatively consistent with operating income of $10.1 million for the three months ended March 31, 2021.

Operating income for our retail segment was $4.0 million for the three months ended March 31, 2022, a decrease of $45.4 million compared to an operating income of $49.4 million for the three months ended March 31, 2021.

The decrease in profitability is primarily due to a gain on sale of assets of $43.7 million in the three months ended March 31, 2021 primarily related to the Sale-Leaseback Transactions we closed in the first quarter of 2021 with no such gain in 2022.

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

Operating income for our refining segment was $168.8 million for the three months ended June 30, 2022, an increase of $267.9 million compared to an operating loss of $99.1 million for the three months ended June 30, 2021.

The increase in profitability was primarily driven by an increase in product crack spreads across all of our refineries and a favorable change in FIFO benefit in Hawaii, partially offset by unfavorable purchased product differentials and derivatives costs, including crack spread hedges, at our Hawaii refinery and a $20.1 million increase in RINs expenses.

Operating income for our logistics segment was $15.9 million for the three months ended June 30, 2022, an increase of $1.4 million compared to $14.5 million for the three months ended June 30, 2021.

The increase is due to higher throughput revenues across our Washington and Wyoming assets.

Operating income for our retail segment was $5.5 million for the three months ended June 30, 2022, a decrease of $7.2 million compared to $12.7 million for the three months ended June 30, 2021.

The decrease was primarily due to a 10% decline in fuel volumes and a 5% decrease in fuel margins related to higher crude oil prices and higher operating expenses in the three months ended June 30, 2022 related to higher planned repairs and maintenance expenses, increased employee costs, and higher credit card processing fees due to increased gasoline prices.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021

Operating income for our refining segment was $50.5 million for the six months ended June 30, 2022, an increase of $240.5 million compared to an operating loss of $190.0 million for the six months ended June 30, 2021.

The increase in profitability was primarily driven by an increase in product crack spreads across all of our refineries, a $47.8 million decrease in RINs expenses, and a favorable change in FIFO benefit in Hawaii, partially offset by unfavorable purchased product differentials and derivatives costs, including crack spread hedges, and fuel burn costs at our Hawaii refinery, higher costs associated with our inventory financing agreements, and a 4% decrease in refining sales volume primarily related to the Washington refinery turnaround in 2022.

Other factors impacting our results period over period include a gain on sale of assets of $19.6 million in the six months ended June 30, 2021 primarily related to the 2021 Hawaii sale-leaseback transactions we closed in the first quarter of 2021 with no such gain in 2022.

Operating income for our logistics segment was $25.8 million for the six months ended June 30, 2022, which was relatively consistent with $24.6 million for the six months ended June 30, 2021.

Operating income for our retail segment was $9.6 million for the six months ended June 30, 2022, a decrease of $52.4 million compared to $62.0 million for the six months ended June 30, 2021.

The decrease in profitability is primarily due to a gain on sale of assets of $44.8 million in the six months ended June 30, 2021 primarily related to the 2021 Hawaii sale-leaseback transactions we closed in the first quarter of 2021 with no such gain in 2022 and higher operating expenses in the six months ended June 30, 2022 primarily related to higher planned repairs and maintenance expenses, higher rent expense related to the additional leases from our 2021 Hawaii sale-leaseback transactions, and higher credit card processing fees due to increased gasoline prices.

Adjusted Gross Margin

Three months ended March 31, 2022 compared to the three months ended March 31, 2021

For the three months ended March 31, 2022, our refining Adjusted Gross Margin was $58.7 million, an increase of $53.7 million compared to $5.0 million for the three months ended March 31, 2021.

The increase was primarily due to favorable crack spreads across all our refineries and lower RINs costs, partially offset by unfavorable feedstock and purchased product costs, higher costs associated with our inventory financing agreements, and higher fuel burn costs.

Adjusted Gross Margin for the Hawaii refinery improved from $0.76 per barrel during the three months ended March 31, 2021 to $3.27 per barrel during the three months ended March 31, 2022 primarily due to favorable crack spreads and decreased RINs costs, partially offset by unfavorable feedstock, purchased product, and realized derivative costs, increased fuel burn costs, and higher costs associated with our inventory financing agreement.

Adjusted Gross Margin for the Wyoming refinery increased by $22.56 per barrel primarily due to decreased RINs costs, a favorable FIFO change of $9.8 million, improved crack spreads, and higher sales volumes.

Adjusted Gross Margin for the Washington refinery increased by $2.07 per barrel primarily due to favorable crack spreads and decreased RINs costs, partially offset by unfavorable feedstock costs, reduced sales volumes related to the 2022 turnaround, and higher costs associated with our inventory financing agreement.

For the three months ended March 31, 2022, our logistics Adjusted Gross Margin was $18.7 million, which was relatively consistent with $19.2 million for the three months ended March 31, 2021.

For the three months ended March 31, 2022, our retail Adjusted Gross Margin was $26.1 million, which was relatively consistent with $25.3 million for the three months ended March 31, 2021.

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

For the three months ended June 30, 2022, our refining Adjusted Gross Margin was $287.3 million, an increase of $234.8 million compared to $52.5 million for the three months ended June 30, 2021.

The increase was primarily driven by improved crack spreads partially offset by unfavorable realized derivatives costs, including crack spread hedges, higher purchased product differentials, and higher inventory financing costs primarily at our Hawaii refinery.

Adjusted Gross Margin for the Hawaii refinery increased from $2.73 per barrel during the three months ended June 30, 2021 to $18.71 per barrel during the three months ended June 30, 2022 primarily due to improved crack spreads, partially offset by unfavorable crude and purchased product differentials, unfavorable realized derivatives, and higher costs associated with our inventory financing agreement.

Adjusted Gross Margin for the Wyoming refinery increased by $28.24 per barrel primarily due to improved crack spreads.

Adjusted Gross Margin for the Washington refinery increased by $18.53 per barrel primarily due to improved crack spreads, partially offset by unfavorable feedstock costs.

For the three months ended June 30, 2022, our logistics Adjusted Gross Margin was $24.9 million, an increase of $1.5 million compared to $23.4 million for the three months ended June 30, 2021.

The increase is primarily due to higher throughput revenues across our Washington and Wyoming assets.

For the three months ended June 30, 2022, our retail Adjusted Gross Margin was $27.6 million, a decrease of $4.2 million compared to $31.8 million for the three months ended June 30, 2021.

The decrease was primarily due to a 10% decline in sales volumes and a 5% decrease in fuel margins related to higher crude oil prices.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021

For the six months ended June 30, 2022, our refining Adjusted Gross Margin was $350.0 million, an increase of $244.3 million compared to $105.7 million for the six months ended June 30, 2021.

The increase was primarily due to favorable crack spreads across all our refineries partially offset by unfavorable purchased product differentials and higher realized derivatives costs, including crack spread hedges, inventory financing agreement, fuel burn, and refined product costs.

Adjusted Gross Margin for the Hawaii refinery improved from $3.51 per barrel during the six months ended June 30, 2021 to $11.22 per barrel during the six months ended June 30, 2022 primarily due to improved crack spreads, partially offset by unfavorable crude and purchased product differentials, unfavorable realized derivatives, and higher costs associated with our inventory financing agreement.

Adjusted Gross Margin for the Wyoming refinery increased by $21.59 per barrel primarily due to improved crack spreads and a favorable FIFO change of $12.7 million, partially offset by unfavorable feedstock costs.

Adjusted Gross Margin for the Washington refinery increased by $12.03 per barrel primarily due to favorable crack spreads partially offset by unfavorable feedstock costs and reduced sales volumes related to the 2022 turnaround.

For the six months ended June 30, 2022, our logistics Adjusted Gross Margin was $43.6 million, which was relatively consistent with $42.6 million for the six months ended June 30, 2021.

For the six months ended June 30, 2022, our retail Adjusted Gross Margin was $53.6 million, a decrease of $3.5 million compared to $57.1 million for the six months ended June 30, 2021.

The decrease was primarily due to a a 1% decrease in fuel margins related to higher crude oil prices and a 5% decline in fuel sales volumes.

Discussion of Consolidated Results

Three months ended March 31, 2022 compared to the three months ended March 31, 2021

For the three months ended March 31, 2022, revenues were $1.4 billion, a $0.5 billion increase compared to $0.9 billion for the three months ended March 31, 2021.

The increase was primarily due to an increase of $0.4 billion in third-party revenues at our refining segment, primarily related to higher crude oil prices and crack spreads across our refining locations, partially offset by a 25% decrease in refining sales volume at our Washington refinery, mainly due to the 2022 turnaround.

Average Brent crude oil prices rose to $97.90 in the three months ended March 31, 2022 compared to $61.32 per barrel in the three months ended March 31, 2021, and WTI crude oil prices rose to $95.01 per barrel during the three months ended March 31, 2022 compared to $58.14 in the three months ended March 31, 2021.

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

For the three months ended June 30, 2022, revenues were $2.1 billion, a $0.9 billion increase compared to $1.2 billion for the three months ended June 30, 2021.

The increase was primarily due to an increase of $0.9 billion in third-party refining segment revenue as a result of increases in Brent and WTI crude oil prices and an increase in average product crack spreads, partially offset by a 2% decrease in refining sales volumes.

Average Brent crude oil prices increased to $111.98 per barrel during the second quarter of 2022 compared to $69.08 per barrel during the second quarter of 2021, and average WTI crude oil prices increased to $108.52 per barrel during the second quarter of 2022 compared to $66.17 per barrel during the second quarter of 2021.

Revenues at our retail segment increased $28.8 million primarily due to a 48% increase in fuel prices.

Cost of Revenues (Excluding Depreciation).

For the three months ended March 31, 2022, cost of revenues (excluding depreciation) was $1.4 billion, a $0.5 billion increase compared to $0.9 billion for the three months ended March 31, 2021.

The increase was primarily due to increases in Brent and WTI crude oil prices as discussed above, higher feedstock, purchased product, and derivative costs, and higher costs associated with our inventory financing agreements, partially offset by a $67.9

million decrease in RINs expense across our refineries.

For the three months ended June 30, 2022, cost of revenues (excluding depreciation) was $1.8 billion, a $0.6 billion increase compared to $1.2 billion for the three months ended June 30, 2021.

The increase was primarily driven by higher Brent and WTI crude oil prices as discussed above and unfavorable purchased product differentials and derivatives costs at our Hawaii refinery, partially offset by lower refining sales volumes as discussed above and favorable changes in FIFO benefit at our Hawaii refinery.

Other factors impacting our results period over period include 66% higher fuel costs at our retail segment.

Operating Expense (Excluding Depreciation).

For the three months ended March 31, 2022, operating expense (excluding depreciation) was $81.4 million, an increase of $7.2 million when compared to $74.2 million for the three months ended March 31, 2021.

The increase was primarily driven by higher utility and maintenance expenses at our Hawaii and Washington refineries and higher maintenance and rental expenses at our Hawaii retail locations.

Depreciation, Depletion, and Amortization .

For the three months ended March 31, 2022, DD&A was $23.8 million, which was relatively consistent with $22.9 million for the three months ended March 31, 2021.

Gain on Sale of Assets, Net.

For the three months ended March 31, 2022, there was no gain on sale of assets, net.

For the three months ended March 31, 2021, the gain on sale of assets, net was approximately $64.9 million and primarily related to the Sale-Leaseback Transactions we closed in the first quarter of 2021.

For the three months ended June 30, 2022, operating expense (excluding depreciation) was $82.3 million, a $13.5 million increase when compared to $68.8 million for the three months ended June 30, 2021.

The increase in operating expenses was primarily driven by higher utility and maintenance costs and increased employee costs.

Depreciation and Amortization .

For the three months ended June 30, 2022, D&A was $25.6 million, an increase of $2.1 million compared to $23.5 million for the three months ended June 30, 2021.

The increase was primarily due to the amortization of our Washington refinery turnaround projects completed in the first quarter of 2022.

Loss on Sale of Assets, Net.

During the three months ended June 30, 2022, there was an immaterial loss on sale of assets.

During the three months ended June 30, 2021, we recorded a loss of $0.5 million primarily related to the sale and disposal of certain retail locations.

General and Administrative Expense (Excluding Depreciation).

For the three months ended March 31, 2022, general and administrative expense (excluding depreciation) was $15.9 million, an increase of $4.0 million compared to $11.9 million for the three months ended March 31, 2021.

For the three months ended June 30, 2022, general and administrative expense (excluding depreciation) was $15.4 million, an increase of $3.2 million compared to $12.2 million for the three months ended June 30, 2021.

The increase was primarily due to an increase in employee costs.

Interest Expense and Financing Costs, Net .

For the three months ended June 30, 2022, our interest expense and financing costs were $18.2 million, an increase of $1.0 million compared to $17.2 million for the three months ended June 30, 2021.

The increase was primarily due to higher fees related to our inventory financing, partially offset by lower outstanding debt balances driven by the partial redemption of the outstanding 12.875% Senior Secured Notes in June 2021 and the repurchase and cancellation of a portion of such notes in the second quarter of 2022, and the final maturity of the 5.00% Convertible Senior Notes on June 15, 2021.

Please read Note 7—Inventory Financing Agreements and Note 9—Debt to our condensed consolidated financial statements for further discussion on our intermediation agreements and indebtedness, respectively.

Debt Extinguishment and Commitment Costs.

For the three months ended June 30, 2021, our debt extinguishment costs were $6.6 million and primarily represented extinguishment costs associated with the redemption of $36.8 million of 12.875% Senior Secured Notes in June 2021.

For the three months ended June 30, 2022, our debt extinguishment and commitment costs were $5.7 million and primarily represented extinguishment costs associated with the repurchase and cancellation of an additional $36.9 million of 12.875% Senior Secured Notes in the second quarter of 2022.

Please read Note 9—Debt to our condensed consolidated financial statements for further discussion on our indebtedness.

Income Taxes.

For the three months ended June 30, 2022, we recorded income tax expense of $1.1 million primarily related to increased taxable income.

For the three months ended June 30, 2021, we recorded an income tax expense of $0.6 million primarily related to foreign taxes.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021

For the six months ended June 30, 2022, revenues were $3.5 billion, a $1.4 billion increase compared to $2.1 billion for the six months ended June 30, 2021.

The increase was primarily due to an increase of $1.3 billion in third-party revenues at our refining segment, primarily related to higher crude oil prices and crack spreads across all our refining locations, partially offset by a 4% decrease in refining sales volume, primarily related to the Washington refinery turnaround in 2022.

Average Brent crude oil prices rose to $104.98 in the six months ended June 30, 2022 compared to $65.22 per barrel in the six months ended June 30, 2021, and average WTI crude oil prices rose to $101.8 per barrel during the six months ended June 30, 2022 compared to $62.18 in the six months ended June 30, 2021.

Revenues at our retail segment increased $57.5 million primarily due to a 45% increase in fuel prices.

Cost of Revenues (Excluding Depreciation).

For the six months ended June 30, 2022, cost of revenues (excluding depreciation) was $3.2 billion, a $1.1 billion increase compared to $2.1 billion for the six months ended June 30, 2021.

The increase was primarily due to increases in Brent and WTI crude oil prices as discussed above, higher purchased product differentials and derivative costs at our Hawaii refinery, and higher costs associated with our inventory financing agreements, partially offset by a 4% decrease in refining sales volume and a favorable change in FIFO benefit at our Hawaii refinery.

Other factors impacting our results period over period include 61% higher fuel costs at our retail segment.

Operating Expense (Excluding Depreciation).

For the six months ended June 30, 2022, operating expense (excluding depreciation) was $163.7 million, an increase of $20.7 million when compared to $143.0 million for the six months ended June 30, 2021.

The increase was primarily driven by higher utility and maintenance expenses, increased employee costs, and higher rental expenses primarily related to the leases from our Hawaii sale-leaseback transactions in 2021.

Depreciation and Amortization .

For the six months ended June 30, 2022, D&A was $49.4 million, an increase of $3.0 million compared to $46.4 million for the six months ended June 30, 2021.

The increase was primarily due to the amortization of our Washington refinery turnaround projects completed in the first quarter of 2022.

Loss on Sale of Assets, Net.

For the six months ended June 30, 2022, there was an immaterial loss on sale of assets, net.

For the six months ended June 30, 2021, the gain on sale of assets, net was approximately $64.4 million and primarily related to the Hawaii sale-leaseback transactions we closed in the first quarter of 2021.

General and Administrative Expense (Excluding Depreciation).

For the six months ended June 30, 2022, general and administrative expense (excluding depreciation) was $31.3 million, an increase of $7.2 million compared to $24.1 million for the six months ended June 30, 2021.

The increase was primarily due to higher employee costs.

Interest Expense and Financing Costs, Net .

For the three months ended March 31, 2022, our interest expense and financing costs were $16.4 million, a decrease of $1.8 million when compared to $18.2 million for the three months ended March 31, 2021.

The decrease was primarily due to lower outstanding debt balances in 2022 driven by the early partial repayment of the outstanding 12.875% Senior Secured Notes and the full repayment at maturity of the 5.00% Convertible Senior Notes in June 2021, partially offset by higher fees related to our inventory financing.

For the six months ended June 30, 2022, our interest expense and financing costs were $34.5 million, a decrease of $0.8 million when compared to $35.3 million for the six months ended June 30, 2021.

The decrease was primarily due to lower outstanding debt balances in 2022 driven by early partial repayments of the outstanding 12.875% Senior Secured Notes in the second quarters of 2021 and 2022 and the full repayment at maturity of the 5.00% Convertible Senior Notes in June 2021, partially offset by higher fees related to our inventory financing.

Debt Extinguishment and Commitment Costs.

For the three months ended March 31, 2021, our debt extinguishment and commitment costs were $1.5 million and primarily represent $1.4 million in extinguishment costs associated with the repayment of the Retail Property Term Loan on February 23, 2021.

No such costs were incurred for the three months ended March 31, 2022.

For the six months ended June 30, 2021, our debt extinguishment and commitment costs were $8.1 million and primarily represented $6.6 million in extinguishment costs associated with the redemption of $36.8 million of 12.875% Senior Secured Notes in June 2021 and $1.4 million in extinguishment costs associated with the repayment of the Retail Property Term Loan on February 23, 2021.

For the six months ended June 30, 2022, our debt extinguishment and commitment costs were $5.7 million and primarily represented extinguishment costs associated with the repurchase and cancellation of an additional $36.9 million of 12.875% Senior Secured Notes in the second quarter of 2022.

Please read Note 9—Debt to our condensed consolidated financial statements for further discussion on our indebtedness.

Gain on Curtailment of Pension Obligation.

For the three months ended March 31, 2021, we recorded a $2.0 million gain on curtailment of pension obligation related to the March 2021 Wyoming Refining plan amendment.

No such gain was recorded during the three months ended March 31, 2022.

For the six months ended June 30, 2021, we recorded a $2.0 million gain on curtailment of pension obligation related to the March 2021 Wyoming Refining plan amendment.

No such gain was recorded during the six months ended June 30, 2022.

Income Taxes.

For the three months ended March 31, 2022, we recorded an income tax benefit of $0.4 million primarily related to an increase in our net operating loss carryforwards.

For the three months ended March 31, 2021, we did not record any income taxes.

For the six months ended June 30, 2022, we recorded an income tax expense of $0.7 million primarily related to increased taxable income.

For the six months ended June 30, 2021, we recorded an income tax expense of $0.6 million primarily driven by foreign taxes.

Consolidating Condensed Financial Information

8 unchanged sentences

For purposes of the following condensed consolidating information, the Parent’s investment in its subsidiaries is accounted for under the equity method of accounting (dollar amounts in thousands).

As of March 31, 2022

As of June 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

10 unchanged sentences

Property, plant, and equipment 19,740 1,173,052 3,955 1,196,747

Less accumulated depreciation, depletion, and amortization (14,497) (321,498) (2,980) (338,975)

Less accumulated depreciation and amortization (14,983) (338,875) (3,027) (356,885)

Property, plant, and equipment, net 4,757 834,177 928 839,862

44 unchanged sentences

Property, plant, and equipment 19,535 1,156,906 3,956 1,180,397

Less accumulated depreciation, depletion, and amortization (13,869) (307,091) (2,932) (323,892)

Less accumulated depreciation and amortization (13,869) (307,091) (2,932) (323,892)

Property, plant, and equipment, net 5,666 849,815 1,024 856,505

31 unchanged sentences

Total liabilities and stockholders’ equity $ 331,909 $ 2,538,699 $ (300,357) $ 2,570,251

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

4 unchanged sentences

Operating expense (excluding depreciation) — 82,342 — 82,342

Depreciation, depletion, and amortization 628 23,103 49 23,780

Depreciation and amortization 576 24,960 47 25,583

Loss (gain) on sale of assets, net 27 (12) — 15

5 unchanged sentences

Interest expense and financing costs, net (4) (18,242) 92 (18,154)

Debt extinguishment and commitment costs — (5,672) — (5,672)

Other income (expense), net 3 44 — 47

5 unchanged sentences

Adjusted EBITDA $ (4,753) $ 246,798 $ 48 $ 242,093

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

4 unchanged sentences

Operating expense (excluding depreciation) — 68,821 — 68,821

Depreciation, depletion, and amortization 666 22,119 95 22,880

Depreciation and amortization 618 22,882 48 23,548

Loss (gain) on sale of assets, net — 569 (59) 510

2 unchanged sentences

Total operating expenses 3,370 1,298,667 (11) 1,302,026

Operating loss (4,209) (94,779) 54,326 (44,662)

Operating income (loss) (3,370) (81,166) 35 (84,501)

Other income (expense)

9 unchanged sentences

Adjusted EBITDA $ (3,110) $ 29,736 $ 25 $ 26,651

Six Months Ended June 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

Revenues $ — $ 3,456,564 $ 61 $ 3,456,625

Operating expenses

Cost of revenues (excluding depreciation) — 3,159,174 — 3,159,174

Operating expense (excluding depreciation) — 163,746 — 163,746

Depreciation and amortization 1,204 48,063 96 49,363

Loss (gain) on sale of assets, net 27 (12) — 15

General and administrative expense (excluding depreciation) 8,934 22,397 — 31,331

Acquisition and integration costs 63 — — 63

Total operating expenses 10,228 3,393,368 96 3,403,692

Operating income (loss) (10,228) 63,196 (35) 52,933

Other income (expense)

Interest expense and financing costs, net (9) (34,725) 186 (34,548)

Debt extinguishment and commitment costs — (5,672) — (5,672)

Other income (expense), net (4) 53 — 49

Equity earnings (losses) from subsidiaries 22,315 — (22,315) —

Total other income (expense), net 22,302 (40,344) (22,129) (40,171)

Income (loss) before income taxes 12,074 22,852 (22,164) 12,762

Income tax benefit (expense) (1) — (5,699) 5,011 (688)

Net income (loss) $ 12,074 $ 17,153 $ (17,153) $ 12,074

Adjusted EBITDA $ (8,587) $ 263,003 $ 61 $ 254,477

Six Months Ended June 30, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

Revenues $ — $ 2,106,181 $ 24 $ 2,106,205

Operating expenses

Cost of revenues (excluding depreciation) — 2,086,161 — 2,086,161

Operating expense (excluding depreciation) — 143,726 (717) 143,009

Depreciation and amortization 1,284 45,001 143 46,428

Loss (gain) on sale of assets, net — (10,639) (53,763) (64,402)

General and administrative expense (excluding depreciation) 6,209 17,877 — 24,086

Acquisition and integration costs 86 — — 86

Total operating expenses 7,579 2,282,126 (54,337) 2,235,368

Operating income (loss) (7,579) (175,945) 54,361 (129,163)

Other income (expense)

Interest expense and financing costs, net (2,494) (32,971) 128 (35,337)

Debt extinguishment and commitment costs — (6,719) (1,416) (8,135)

Gain on curtailment of pension obligation — 2,032 — 2,032

Other income (expense), net (13) 38 — 25

Equity earnings (losses) from subsidiaries (161,082) — 161,082 —

Total other income (expense), net (163,589) (37,620) 159,794 (41,415)

Income (loss) before income taxes (171,168) (213,565) 214,155 (170,578)

Income tax benefit (expense) (1) (17) 51,528 (52,118) (607)

Net income (loss) $ (171,185) $ (162,037) $ 162,037 $ (171,185)

Adjusted EBITDA $ (6,222) $ 45,849 $ 741 $ 40,368

________________________________________

1 unchanged sentence

The Non-Guarantor Subsidiaries and Eliminations column includes tax benefits recognized at the Par consolidated level that are primarily associated with changes to the consolidated valuation allowance and other deferred tax balances.

Three Months Ended March 31, 2022

Non-GAAP Financial Measures

Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Issuer and Subsidiaries,” and “Non-Guarantor Subsidiaries and Eliminations” levels, is calculated in the same manner as for the Par Pacific Holdings, Inc.

Adjusted EBITDA calculations.

See “Results of Operations — Non-GAAP Performance Measures — Adjusted Net Income (Loss) and Adjusted EBITDA” above.

The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, Net income (loss), on a historical basis for the periods indicated (in thousands):

Three Months Ended June 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

2 unchanged sentences

Inventory valuation adjustment — (7,557) — (7,557)

RINs loss (gain) in excess of net obligation — 7,256 — 7,256

RINs mark-to-market adjustments — 78,548 — 78,548

Unrealized loss (gain) on derivatives — (28,607) — (28,607)

Acquisition and integration costs — — — —

Debt extinguishment and commitment costs — 5,672 — 5,672

Severance costs — 35 — 35

Loss (gain) on sale of assets, net 27 (12) — 15

Depreciation and amortization 576 24,960 47 25,583

Interest expense and financing costs, net 4 18,242 (92) 18,154

Equity losses (income) from subsidiaries (154,485) — 154,485 —

Income tax expense (benefit) — 38,096 (36,971) 1,125

Adjusted EBITDA (3) $ (4,753) $ 246,798 $ 48 $ 242,093

Three Months Ended June 30, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

Net income (loss) $ (108,958) $ (75,244) $ 75,244 $ (108,958)

Inventory valuation adjustment — 29,657 — 29,657

LIFO liquidation adjustment — 2,263 — 2,263

RINs mark-to-market adjustments — 54,158 — 54,158

Unrealized loss on derivatives — 1,404 — 1,404

Acquisition and integration costs (352) — — (352)

Debt extinguishment and commitment costs — 6,628 — 6,628

Loss (gain) on sale of assets, net — 569 (59) 510

Depreciation and amortization 618 22,882 48 23,548

Interest expense and financing costs, net 1,204 16,074 (92) 17,186

Equity losses (income) from subsidiaries 104,361 — (104,361) —

Income tax expense (benefit) 17 (28,655) 29,245 607

Adjusted EBITDA (3) $ (3,110) $ 29,736 $ 25 $ 26,651

Six Months Ended June 30, 2022

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

and Subsidiaries

Net income (loss) $ 12,074 $ 17,153 $ (17,153) $ 12,074

Inventory valuation adjustment — 73,096 — 73,096

RINs mark-to-market adjustments — 89,850 — 89,850

Unrealized loss (gain) on derivatives — (13,155) — (13,155)

Acquisition and integration costs 63 — — 63

Debt extinguishment and commitment costs — 5,672 — 5,672

Severance costs 351 1,912 — 2,263

Depreciation, depletion, and amortization 628 23,103 49 23,780

Loss (gain) on sale of assets, net 27 (12) — 15

Depreciation and amortization 1,204 48,063 96 49,363

Interest expense and financing costs, net 9 34,725 (186) 34,548

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Adjusted EBITDA (1) $ (8,587) $ 263,003 $ 61 $ 254,477

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Parent Guarantor Issuer and Subsidiaries Non-Guarantor Subsidiaries and Eliminations Par Pacific Holdings, Inc.

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LIFO liquidation adjustment — 4,151 — 4,151

RINs loss (gain) in excess of net obligation — 28,770 — 28,770

RINs mark-to-market adjustments — 131,060 — 131,060

Unrealized loss (gain) on derivatives — (2,608) — (2,608)

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Loss (gain) on sale of assets, net — (10,639) (53,763) (64,402)

Depreciation, depletion, and amortization 666 22,119 95 22,880

Depreciation and amortization 1,284 45,001 143 46,428

Interest expense and financing costs, net 2,494 32,971 (128) 35,337

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________________________________________

(1) For the three months ended March 31, 2022, and the three months ended March 31, 2021, there was no change in valuation allowance and other deferred tax items, change in value of common stock warrants, impairment expense, impairment of investment in Laramie Energy, unrealized gain on derivatives included in equity earnings from Laramie Energy, or equity losses from Laramie Energy.

For the three months ended March 31, 2022, there was no LIFO liquidation adjustment, debt extinguishment and commitment costs, or losses (gains) on sale of assets.

(1) For the three and six months ended June 30, 2022 and 2021, there was no change in valuation allowance and other deferred tax items, change in value of common stock warrants, impairment expense, impairment of investment in Laramie Energy, unrealized gain on derivatives included in equity earnings from Laramie Energy, or equity losses from Laramie Energy.

For the three and six months ended June 30, 2022, there was no LIFO liquidation adjustment.

Liquidity and Capital Resources

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Our primary sources of liquidity are cash flows from operations, cash on hand, amounts available under our credit agreements, and access to capital markets.

Our liquidity position as of March 31, 2022 was $212.0 million and consisted of $207.4 million at Par Petroleum, LLC and subsidiaries, $4.7 million at Par Pacific Holdings, and an immaterial amount at all our other subsidiaries.

As of March 31, 2022, we had access to the ABL Credit Facility, the J.

Our liquidity position as of June 30, 2022 was $285.8 million and consisted of $280.9 million at Par Petroleum, LLC and subsidiaries, $4.8 million at Par Pacific Holdings, and $0.1 million at all our other subsidiaries.

As of June 30, 2022, we had access to the ABL Credit Facility, the J.

Aron Discretionary Draw Facility, the MLC receivable advances, and cash on hand of $186.2 million.

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The Term Loan B Facility may also require annual prepayments of principal with a variable percentage of our excess cash flow, 50% or 25% depending on our consolidated year end secured leverage ratio (as defined in the Term Loan B Facility agreement).

The following table summarizes cash activities for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

Net cash used in operating activities $ (7,685) $ (30,737)

The following table summarizes cash activities for the six months ended June 30, 2022 and 2021 (in thousands):

Six Months Ended June 30,

Net cash provided by operating activities $ 27,657 $ 1,815

Net cash provided by (used in) investing activities (28,952) 88,847

Net cash provided by financing activities 75,252 15,358

Cash flows for the three months ended March 31, 2022

Net cash used in operating activities for the three months ended March 31, 2022 was driven primarily by a net loss of $137.1 million, offset by net cash provided by changes in operating assets and liabilities of approximately $85.9 million and non-cash charges to operations of approximately $43.4 million.

Cash flows for the six months ended June 30, 2022

Net cash provided by operating activities for the six months ended June 30, 2022 was driven primarily by non-cash charges to operations of approximately $49.9 million and net income of $12.1 million, partially offset by net cash used for changes in operating assets and liabilities of approximately $34.3 million.

Non-cash charges to operations consisted primarily of the following adjustments:

• depreciation, depletion, and amortization expenses of $23.8 million;

• unrealized loss on derivatives contracts of $15.5 million;

• depreciation and amortization expenses of $49.4 million;

• stock based compensation costs of $5.8 million;

Net cash provided by changes in operating assets and liabilities resulted primarily from:

• net increases in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations and accounts payable;

• an increase in gross environmental credit obligations primarily related to current period production volumes and increases in RINs prices;

• debt commitment and extinguishment costs of $5.7 million;

partially offset by

• unrealized gain on derivatives contracts of $13.2 million.

Net cash used for changes in operating assets and liabilities resulted primarily from:

• net increases in our inventories and accounts receivable resulting from higher crude oil and refined product prices and higher inventory volumes at our Hawaii refinery;

• $28.9 million in deferred turnaround costs primarily related to the 2022 turnaround at our Washington refinery.

Net cash used in investing activities for the three months ended March 31, 2022 consisted primarily of $16.3 million in additions to property, plant, and equipment driven by profit improvement and turnaround projects including crude recovery and debottlenecking projects at our Tacoma refinery, maintenance projects at our Wyoming refinery, and co-generation engine and combustion projects at our Hawaii refinery.

Net cash provided by financing activities was approximately $52.6 million for the three months ended March 31, 2022 and consisted primarily of the following activities:

• increase in prepaid and other primarily driven by $66.1 million increase in collateral posted with broker to support commodity derivative positions;

partially offset by

• net increases in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations and accounts payable;

• an increase in gross environmental credit obligations primarily related to current period production volumes and increases in RINs prices.

Net cash used in investing activities for the six months ended June 30, 2022 consisted primarily of $29.0 million in additions to property, plant, and equipment driven by profit improvement and turnaround projects including crude recovery and debottlenecking projects at our Tacoma refinery, maintenance and tank replacement projects at our Wyoming refinery, and co-generation engine and combustion and tank projects at our Hawaii refinery.

Net cash provided by financing activities was approximately $75.3 million for the six months ended June 30, 2022 and consisted primarily of the following activities:

• net borrowings under the J.

Aron Discretionary Draw Facility and MLC receivable advances of $142.3 million;

• net borrowings of debt of $18.1 million primarily driven by increased borrowings on the ABL Revolver;

partially offset by

• net repayments of debt of $57.0 million primarily driven by the partial repurchase and cancellation of our 7.75% Senior Secured Notes and 12.875% Senior Secured Notes;

• repurchases of common stock of $6.5 million.

Cash flows for the three months ended March 31, 2021

Net cash used in operating activities was approximately $30.7 million for the three months ended March 31, 2021, which resulted from a net loss of approximately $62.2 million and non-cash earnings from operations of approximately $54.3 million, partially offset by net cash provided by changes in operating assets and liabilities of approximately $85.8 million.

Net cash provided by investing activities was approximately $94.7 million for the three months ended March 31, 2021 and primarily related to proceeds received from the Sale-Leaseback Transactions.

Net cash provided by financing activities for the three months ended March 31, 2021 was approximately $82.5 million, which consisted primarily of proceeds of $87.4 million from our March 2021 equity offering of common stock and net borrowings associated with the J.

Aron deferred payment and MLC receivable advances of approximately $44.5 million, partially offset by net debt and insurance premium repayments of approximately $47.3 million.

Cash flows for the six months ended June 30, 2021

Net cash provided by operating activities was approximately $1.8 million for the six months ended June 30, 2021, which resulted from a net loss of approximately $171.2 million, partially offset by net cash provided by changes in operating assets and liabilities of approximately $191.2 million and non-cash earnings from operations of approximately $18.2 million.

The change in our operating assets and liabilities for the six months ended June 30, 2021 was primarily due to an increase in our gross environmental credit obligations of $204.0 million and a net increase in our Supply and Offtake Agreement and Washington Refinery Intermediation Agreement obligations of $199.6 million, partially offset by increases in inventories of $184.1 million and accounts receivable of $99.5 million.

Net cash provided by changes in operating assets and liabilities also includes an increase of $5.7 million in deferred turnaround costs.

Net cash provided by investing activities was approximately $88.8 million for the six months ended June 30, 2021 and primarily related to proceeds received from the 2021 Hawaii sale-leaseback transactions partially offset by $14.0 million of additions to property, plant, and equipment.

Net cash provided by financing activities for the six months ended June 30, 2021 was approximately $15.4 million, which consisted primarily of proceeds of $87.2 million from our March 2021 equity offering of common stock and net borrowings associated with the J.

Aron deferred payment and MLC receivable advances of approximately $76.0 million, partially offset by net debt and insurance premium repayments of approximately $141.3 million and $5.6 million in extinguishment costs related to the repayment of the Retail Property Term Loan and the redemption of a portion of the 12.875% Senior Secured Notes.

Cash Requirements

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Washington Refinery Intermediation Agreement .

On March 9, 2022, we and MLC amended the Washington Refinery Intermediation Agreement to advance the term expiry date from December 21, 2022 to March 31, 2023.

We and MLC entered into amendments to the Washington Refinery Intermediation Agreement on March 9, 2022, and May 9, 2022, which, among other things, increased the MLC receivable advances.

Please read Note 7—Inventory Financing Agreements for more information.

Supply and Offtake Agreement.

On April 25, 2022, we entered into an amendment to the Supply and Offtake Agreement pursuant to which, among other things, the capacity under the Discretionary Draw Facility was increased from $165 million to $215 million.

Please read Note 19—Subsequent Events for further information about the amendment.

Aron entered into amendments to the Supply and Offtake Agreement on April 25, 2022, and May 17, 2022, which, among other things, increased the capacity under the Discretionary Draw Facility.

Please read Note 7—Inventory Financing Agreements for more information.

ABL Credit Facility.

On February 2, 2022, the ABL Borrowers entered into the ABL Loan Agreement with certain lenders and Bank of America, N.A., which amended and restated the first Loan and Security Agreement in its entirety.

The ABL Loan Agreement was further amended on March 30, 2022.

Please read Note 9—Debt for more information.

Debt Repayments.

During the six months ended June 30, 2022, we repurchased and cancelled $5.0 million and $36.9 million in aggregate principal amounts of the 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, respectively.

Please read Note 9—Debt for more information.

Critical Accounting Estimates

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and the estimates, assumptions, and projections regarding future financial condition, results of operations, liquidity, and cash flows.

These and other forward-looking statements could cause the actual results, performance, or achievements of Par and its subsidiaries to differ materially

from any future results, performance, or achievements expressed or implied by such forward-looking statements.

These and other forward-looking statements could cause the actual results, performance, or achievements of Par and its subsidiaries to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements.

Statements that are not historical fact are forward-looking statements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis